GERMAN CHANCELLOR ANGELA Merkel has issued a stern warning to floundering Greece – saying that if it does not successfully impose losses on bondholders, the EU will withhold bailout payments to the country.

Her words came ahead of a meeting with Italian leader Mario Monti in Berlin today, amid fears over an auction of Italian debt later this week.

Merkel said: “The voluntary restructuring of Greece’s debt must be moved forward [...] Debt restructuring has to be carried out quickly now because otherwise it won’t be possible to pay out the next tranche for Greece,” according to Business Week.

The German chancellor also discussed the Greek situation in a meeting with IMF managing director Christine Lagarde yesterday. The high-level talks were arranged at short notice in what the Wall Street Journal said was a sign of the urgency of the situation in the eurozone.

Ahead of today’s meeting, Mario Monti has complained that Italy’s sacrifices have not received sufficient recognition from the EU.

According to the Economic Times, he said: “We have not got anything in return from the European Union, such as a drop in interest rates [...] We have to say that our reform policies have not received the recognition and appreciation in Europe that they deserve.”

The meeting is one of a series involving Chancellor Merkel as EU leaders gear up for another summit at the end of the month.

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